What Is Marital Property?
Let me explain marital property to you—it's a legal term in the U.S. that covers assets you and your spouse acquire while married, and these are up for division if you divorce. If you owned something before tying the knot, that's your separate property, just like any inheritances or gifts from third parties you get during the marriage. You can keep certain things out of the marital pool by signing a prenup or postnup agreement.
Some of this won't matter unless you split up or one of you passes away, but you should understand the types of marital property now. That way, when you're buying real estate or other assets, you can set up ownership to match what you really want.
Key Takeaways
- Marital property means what a couple gets during their marriage.
- The state you live in sets the rules for dividing it in divorce.
- In common law states, what one spouse buys is theirs alone unless both names are on the title.
- Nine states are community property states, where marital assets are equally owned by both.
Understanding Marital Property
Marital property includes things like homes, investment properties, cars, boats, furniture, or artwork that you buy together during marriage, as long as it's not separate. It also covers bank accounts, pensions, securities, and retirement accounts—even an IRA, which is legally individual, counts as marital if you add earned income to it while married.
This setup mainly protects your rights as a spouse. Your permanent residence decides if common law or community property rules apply, and that affects how things get split in divorce.
Common Law Property States vs. Community Property States
Your state's type largely decides what's marital property.
Common Law Property States
Most states follow common law, where if one of you acquires property, it's solely theirs. But if both names are on the title or deed, you each own half. For instance, if your wife buys a car in her name only, it's hers; if both names are on it, it's shared.
When one spouse dies, their separate property goes by their will or probate if there's no will. For marital property, if it's joint tenancy with right of survivorship or tenancy by the entirety, it passes to the survivor, ignoring the will. But in tenancy in common, it can go elsewhere per the will. For untitled property, whoever paid or got it as a gift owns it. In divorce or separation, the court divides marital property per state laws.
Community Property States
States like Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are community property states, where assets from marriage are owned equally by both. The IRS notes Tennessee and South Dakota have elective laws, plus Alaska and Puerto Rico.
Alaska lets you opt in if both agree, and similar for the others. Marital property here includes earnings, purchases from those earnings, and debts from the marriage. Pre-marriage stuff, one spouse's inheritance, or separate debts stay separate, but you can mix them if you want. If filing separate taxes, account for community and separate income. On death, joint assets go to the survivor.
Community property starts at marriage and ends when you separate intending to end it, so post-separation earnings or debts are separate.
Marital Property and Divorce
If you divorce and can't agree on splitting marital property, the court decides. In non-community states, it's equitable distribution. In community states, it's usually equal, but exceptions apply if one misappropriates property before or during divorce.
You can set rules with a prenup before marriage, and if it's valid and legal, courts follow it, even in community states.
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